The New York Department of Financial Services (the "NYDFS") adopted standards for filtering programs that monitor transactions for potential anti-money laundering ("AML") and Bank Secrecy Act ("BSA") violations and block transactions that are prohibited by the Treasury's Office of Foreign Assets Control (the "OFAC").
The enhanced standards will apply to: (i) banks, trust companies, private bankers, savings banks, and savings and loan associations chartered under the New York Banking Law ("NYBL"), (ii) branches and agencies of foreign banking corporations licensed under the NYBL to conduct banking operations in New York, and (iii) check cashers and money transmitters licensed pursuant to the NYBL ("Regulated Institutions").
The NYDFS specified that under the adopted standards, each Regulated Institution must maintain either a manual or automated Transaction Monitoring Program reasonably designed for the purpose of monitoring transactions after their execution for potential BSA/AML violations and Suspicious Activity Reporting. In addition, the final regulations require each Regulated Institution to maintain a Filtering Program reasonably designed for the purpose of interdicting transactions that are prohibited by the OFAC.
The standards also require Regulated Institutions to document the identification and specific remedial efforts to address areas, systems or processes that require material improvement, updating or redesign. Moreover, the final regulations mandate that each Regulated Institution adopt and submit to the Superintendent a Board Resolution or Senior Officer(s)' Compliance Finding in the form set forth in Attachment A of the regulations by April 15th of each year. Each Regulated Institution shall maintain for examination by the NYSDFS all records, schedules and data supporting the adoption of the Board Resolution or the Senior Officer(s)' Compliance Finding for a period of five years.
The adopted regulations will become effective on January 1, 2017. The NYSDFS noted that regulators will be required to prepare and submit Annual Board Resolutions or Senior Officer(s)' Compliance Findings to the Superintendent starting April 15, 2018.
The New York State Department of Financial Services proposed rules that would further define the anti-money laundering compliance obligations of banks and other money service businesses, such as check cashers and money transmitters.